New Delhi/Mumbai: A drugmaker, a real estate developer and an edible oil company are among firms answering India’s call to tap undeveloped oil fields and become the newest explorers in the world’s fastest-growing energy consumer.
As many as 42 companies bid in the country’s auction round that closed 21 November. They are vying for 34 of 46 discovered oil and gas fields with estimated reserves of more than India’s total annual output, according to a government statement.
“A lot of the bidders are first time players in oil and gas,” Atanu Chakraborty, the head of oil regulator, directorate general of hydrocarbons, said in a phone interview on Tuesday. “Our intention was to create about five new oil and gas companies through this auction and I’m sure we can do that.”
Prime Minister Narendra Modi is striving to woo investors to help boost oil and gas production from local fields as he targets to reduce overseas energy purchases by 2022. India’s $2-trillion economy imports more than 80% of its crude requirement and a heavy reliance on imports risks its status as the fastest-expanding major economy in the world. The International Energy Agency (IEA) expects the country to be the fastest-growing crude consumer in the world through 2040.
Of 37 non-state companies that have bid, 32 are domestic and five are international, Chakraborty said. These include Sun Petrochemicals Pvt. Ltd, a privately owned company formed by the directors of drugmaker Sun Pharmaceuticals Industries Ltd, Megha Engineering & Infrastructure Ltd, Enquest Drilling Pvt. Ltd and real estate firm Cheval Developers Pvt. Ltd.
“For entry level, we thought it is the best time and moreover the government was ready to help new comers,” said P.C. Saraogi, managing director of bidder Nippon Power Ltd, which is engaged in hydro power and renewable energy.
Nippon Power has bid for eight fields, including three in the northeastern state of Assam, according to a government statement. Explorers Bharat Petro Resources Ltd, Cairn India Ltd and Hindustan Oil Exploration Co. will compete with the company in some of the areas. The foreign bidders include the local unit of Hardy Oil & Gas Plc. All the companies mentioned in this story confirmed bidding for the auction.
State-run Oil & Natural Gas Corp. dominates exploration and production in India. The biggest explorer is struggling to stem the drop in India’s oil output in recent years as most of its fields are maturing. The areas that went under the hammer were discovered by ONGC and state-run Oil India Ltd with estimated in-place oil and gas reserves of about 625 million barrels. They weren’t developed as the explorers focused on bigger fields. “These new companies along with the existing producers can take India forward in fulfilling our targets,” said DGH’s Chakraborty. Bloomberg